Colin J. Campbell is respected as one of the world’s most knowledgable experts on fossil fuels. After being awarded a Ph.D at Oxford in 1957, Dr Campbell joined the oil industry as an exploration geologist. His career took him to Borneo, Trinidad, Colombia, Australia, Papua New Guinea, the USA, Ecuador, United Kingdom, Ireland, and Norway. He is now an associate of PetroPlan, advising governments and industry. He has published extensively, and his recent articles have stimulated lively debate. His views are provocative yet carry the weight of a wide international experience.The following article is excerpted from a paper just recently  revised. (02/18/02)

Peak Oil: an Outlook on Crude Oil Depletion

C.J.Campbell

This paper is about Peak Oil. It truly is a turning point for Mankind, which will affect everyone, although some more than others. Those countries, which plan and prepare, will survive better than those that do not. It is a large and difficult subject, but the essentials are clear.

In summary, these are the main points that have to be grasped:

• Conventional oil – and that will be defined – provides most of the oil produced today, and is responsible for about 95% all oil that has been produced so far.

• It will continue to dominate supply for a long time to come. It is what matters most.

• Its discovery peaked in the 1960s. We now find one barrel for every four we consume.

• Middle East share of production is set to rise. The rest of the world peaked in 1997, and is therefore in terminal decline.

• Non-conventional oil delays peak only a few years, but will ameliorate the subsequent decline.

• Gas, which is less depleted than oil, will likely peak around 2020.

• Capacity limits were breached late in 2000, causing prices to soar leading to world recession.

• The recession may be permanent because any recovery would lead to new oil demand until the limits were again breached which would lead to new price shocks re-imposing recession in a vicious circle.

• World peak may prove to have been passed in 2000, if demand is curtailed by recession.

• Prices may remain weak in such circumstances but since demand is not infinitely elastic they must again rise from supply constraints when essential needs are affected

Peak oil is a turning point for Mankind. The economic prosperity of the 20th Century was driven by cheap, oil-based energy. Everyone had the equivalent of several unpaid and unfed slaves to do his work for him, but now these slaves are getting old and won’t work much longer. We have an urgent need to find how to live without them.

It is stressed that we are not facing a re-run of the Oil Shocks of the 1970s. They were like the tremors before an earthquake, although serious enough, tipping the World into recession. Now, we face the earthquake itself. This shock is very different. It is driven by resource constraints, not politics – although of course politics do enter into it. It is not a temporary interruption but the onset of a permanent new condition. The warning signals have been flying for a long time. They have been plain to see, but the world turned a blind eye, and failed to read the message.

Our lack of preparedness is itself amazing, given the importance of oil to our lives. The warnings were rejected and discredited as if they were words of soothsayers and prophets. But the warning was not prophecy – it simply recognised two undeniable facts:

Discovery reached a peak in the 1960s – despite all the technology we hear so much about, and a worldwide search for the best prospects. It should surprise no one that the corresponding peak of production is now upon us. This simple reasoning has, however, been rejected by flat-earth economists and others with a blind faith in technology and markets forces. Worse still, governments have listened to bad advice. There are many vested interests bent on confusion and denial.

It is worth briefly recalling what occurred in Europe in late 2000, as a foretaste of what happens when oil supply becomes short and expensive. The French fishermen blockaded the Channel Ports because their fuel costs had doubled, even though their fuel was already tax-free. The dispute spread rapidly to England and other countries. Schools were closed. Hospitals had red alerts because staff and patients could not reach them. Supermarkets started rationing bread. Trade and industry was seriously interrupted: the cost was huge. People lost confidence in their governments, whose popular support fell sharply. If an interruption in supply lasting only a few days could cause such havoc, it surely demonstrates how utterly dependent on oil we have become.

Depletion is an easy concept to grasp. Think of an Irish pub full of happy people. Think of their pleasure at the first sip from a full glass. Think of the frowns that begin to cross their faces when their glasses are half-empty. They know they have drunk more than is left. It is the turning point. Watch them savour the last drops. While they can order another round of drinks, they know in the back of their minds that eventually closing time will come when there are no more to be had. That is the meaning of depletion. We need to know how big each glass – or oilfield – is, and we need to think of closing time, and judge how many oilfields are left to find.

We are not about to run out of oil, but production is about to reach a peak, if it has not done so already. When peak comes depends on the issue of Rates:

• Discovery Rate – we now find one barrel of conventional oil for every four we consume
• Extraction Rate is controlled by the physics of the reservoir

Demand is driven by economic growth and price. Remember that price is not the same as cost. The cost of producing oil remains low, but its price has to reflect tax, scarcity and control of the main sources of supply.

Before measuring something, the first step is to decide what exactly to measure. It is a question every butcher asks. Does he weigh the meat or the bones as well? There are many different kinds of oil. Each has its own endowment in Nature, characteristics, costs, and rate of extraction that follows a general and inevitable zero-peak-zero profile. Each type contributes differently to peak. Some types rise to peak quickly, others slowly. We need to identify and measure each type carefully.

It is convenient to identify so-called Conventional Oil. It is the meat not the bones. It has contributed most oil to-date and will dominate all supply long into the future. We may concentrate on it, as it controls the date of peak. But there is no universal agreement on how to define it. Here, it is defined to exclude:

• Oil from coal and ìshale”
• Bitumen and Extra-Heavy Oil
• Heavy Oil
• Deepwater Oil
• Polar Oil

Natural Gas liquids from gasfields are also excluded because they belong to the gas domain. …

–

Previous studies evaluated alternative scenarios of supply and demand, based on various assumptions of demand and oil price. Generally, they depicted a plateau of production, starting when Swing Share reached a critical threshold triggering an oil price shock, and ending when the Swing share reached 50% of world demand, which was held to be maximum Swing capacity. But as we approach closer to these critical times, we can see the unfolding picture with greater clarity.

It now appears that the world capacity limits were about breached at the end of 2000, and oil prices began to soar when it became clear that the historic trend of growth at about 2% could not be maintained. As in all previous cases, the high prices triggered economic recession, although there may have been other contributory factors. A highly inflated stockmarket, built on the cheap energy supply of the past and illusions of perpetual growth was evidently due for a radical readjustment. The demand for oil plummeted, falling 5% between 2000 and 2001 according to the Oil & Gas Journal, and prices accordingly crumbled.

OPEC found itself unable to react lest any action were perceived to be hostile to the United States in its conflict with Afghanistan, while the US grand fleet was anchored off the coast of Middle East. Iran and Iraq have been declared enemies by the US President, prompting fears that a new American invasion in the region may be contemplated. It would be a brave man to forecast the future in such circumstances, but the underlying resource constraints do give a basis for a new scenario. It assumes that if the world economy were to try to recover, the demand for oil would rise in parallel until it again hit the ceiling of falling capacity. High prices in a volatile market would follow, re-imposing recession. In these circumstances, it is reasonable to contemplate flat average demand and production until the Swing countries reach their assessed capacity limit of 24 Mb/d by 2010. Soaring prices and growing shortage will then initiate the long-term decline of oil production at the then depletion rate of about 2% a year. Although the model pictures a plateau of production to 2010, it is unlikely to be a very flat one, as great fluctuations in a highly volatile market may be anticipated. It seems therefore that we may look back and find that world peak was passed in 2000, six years before the midpoint of depletion.

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People once believed the earth was flat. Scientific observations to the contrary were treated as blasphemy. The same pressures manifest themselves to-day in a different guise. We might almost call some of them conspiracies of denial and obfuscation. The United States seeks to exaggerate the world’s oil endowment to reduce OPEC’s confidence. It pretends that it does not depend on Middle East oil. It puts out very flawed studies by the US Geological Survey and the Department of Energy. OPEC, for its part, exaggerates its resource base to inhibit non-OPEC investments and moves to energy savings or renewables. It fears losing its oil market on which it utterly depends, with its rapidly rising population. Companies conceal depletion because it sits badly on the investment community. …

Most companies have to sing to the stockmarket, but the Italian national company is less concerned by stockmarket imagery. Its Chairman was able to tell the truth when he reported “New reserves are failing to keep up with growing outputÖÖ My forecast is that between 2000 and 2005 the world will be reaching peak”. The French company, Total-Fina-Elf, has also published its view of a peak around 2010.

British Petroleum certainly wins the prize for the most oblique reference to depletion when it changes its logo to a sunflower and says that BP stands for Beyond Petroleum. But its executives sit on the board of Goldman Sachs, the bankers. They should accordingly know what BP actually thinks behind the lace curtains of corporate make-believe. What do the bankers say?

“The rig count over the last 12 years has reached bottom. This is not because of low oil price. The oil companies are not going to keep rigs employed to drill dry holes. They know it but are unable and willing to admit it. The great merger mania is nothing more than a scaling down of a dying industry in recognition that 90% of global conventional oil has already been found” (Goldman Sachs – August 1999)

Actions speak louder than words. The major companies and many others in the industry are merging and shedding staff. They are also buying their own stock. They conspicuously fail to invest in new refining capacity, which would surely be needed if production were set to rise as depicted. These are moves to downsize because there are no major investment opportunities left. Their past is worth more than their future – and they know it.

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Some general comments may be offered in conclusion, starting with a oil price

Read the full article…

Strong Dollar and Weak Gold ?

Daan Joubert

Bush has made the health of the US economy and its markets an issue in the War on Terror – according to the new Bush doctrine, if any of the US markets should fail, it would mean a victory for bin Laden and al Queda.

 The US dollar is a key in this battle. A firm to strong US dollar is essential if inflows of foreign funds are to be maintained – firstly to prevent a foreign sell-off of US assets and secondly to keep the dollar itself steady given the large trade deficit. …

A strong gold price could also trigger a melt down of the US dollar. Although the slogan “Gold is Dead” has often been heard over the past 5-6 years, the fact is that people of wealth have long memories and when they can no longer trust the dollar, Gold will become King again – as is happening in Japan.

The gold price has moved consistently higher, despite rumours of sustained attempts to keep the well-established lid in place, and has been threatening for some weeks now to blast through the psychological $300 level. …

Under these circumstances it would be really very strange if US authorities and vested interests failed to intervene in these markets – and were not doing all they can to keep the dollar on an even keel, perhaps even gaining slightly all the time, in order to keep foreign investors not only happy but also willing to send more money to the US.

This effort, by extension, also implies moves to contain the gold price below $300, and preferably well below that level. …

Anything could still happen, but the author has a good deal of confidence that this time around it will not be as easy to keep the lid on the gold price – and the dollar healthy, as a currency in wide demand – as what it has been in the past.

Which means, of course, that alert investors stand to make a good deal of money from the opportunities that seem likely to present themselves over the next few months.

This applies to both a steeply rising gold price and, conversely, a plummeting US dollar – in whichever order.

Read the full article…

This morning I received permission to publish the following letter to Secretary of State Colin Powell.

An Open Letter

Secretary of State
U.S. Department of State
2201 C Street NW
Washington, DC 20520

Dear Secretary Powell,

Disparity of wealth in the world today fuels anger and desperation in the dispossessed and in those who identify with them. This anger and desperation can be exploited by those with an extremist agenda. We may wish to make changes in our social system that would tend to reduce disparity, or that would ensure that those on the low end of the income distribution spectrum are assured of a significant minimum. By promoting the security of those who are least secure, we would be promoting the security of all.

We need not violate any of our principles to bring about this change. Most all of us believe that the air and water and other natural resources belong to all. We could require that a fee be paid by anyone who takes or degrades the quality of natural resources. The proceeds of the pollution fees and natural resource user-fees would constitute a monetary representation of the value of earth’s natural resources, and could rightly be shared among all people equally. The value of these resources has been estimated at $33 trillion per year.

Twenty dollars per day for every person on the planet may be enough to make everyone feel that they have a stake in the system and should work to build and improve it, rather than destroy it. Even those who would not do evil may sit by quietly when they know another is bent on destruction, if they feel that the current system is unjust and offers no prospect for meaningful change. We must win the hearts and minds of the world’s people if we want them to help build and defend a civilization, a free and democratic society.

We must empower the dispossessed. Would they choose a world that impoverishes them? Given a free and democratic society, what kind of world would they make? What kind of world would we make? Every one of us should feel that we have opportunities to express our opinion in meaningful ways, (ways that make a difference), regarding how much pollution, monoculture, paving, noise, or extraction of limited resources is just too much. The agreement or lack of agreement between people’s expressed will on these issues on the one hand and the actual reality on the other could serve as an objective measure of democracy.

This would mean a change in our system to bring it more into accord with our own principles regarding both commons property ownership and compensation for damage done or value taken. Economic power, in the form of an equal share of natural resource wealth, belongs to all of us. Our political and economic system should reflect this.

We should pay more attention to how natural resource wealth is managed and apportioned. We allow those in pursuit of profit to take or degrade natural resources, but do not require any compensation be paid to the owners of the resources, the people at large. If we would address this glaring inconsistency in our own behavior vis ‡ vis our principles, we could solve many social and environmental ills.

John Champagne                 

More by John Champagne

The truth is especially hard to believe if it requires that we take action – if it requires that we change. If humanity is to have a future, we must take action – we must change. If humanity is to have a future, we must believe the truth.

Jay Hanson chose the name DIEOFF for his website as a warning to humanity of the impending Fossil Fuel Depletion-Over Population Crisis. Dieoff is not a political term, it comes from science. This morning two excellent scientists explain what it means.

Preview of Coming Attractions: A Reindeer’s Tale

David R. Klein

Reindeer (Rangifer tarandus), introduced to St. Matthew Island in 1944, increased from 29 animals at that time to 6,000 in the summer of 1963 and underwent a crash die-off the following winter to less than 50 animals. In 1957, the body weight of the reindeer was found to exceed that of reindeer in domestic herds by 24 53 percent among females and 46 61 percent among males. The population also responded to the high quality and quantity of the forage on the island by increasing rapidly due to a high birth rate and low mortality. By 1963, the density of the reindeer on the island had reached 46.9 per square mile and ratios of fawns and yearlings to adult cows had dropped from 75 and 45 percent respectively, in 1957 to 60 and 26 percent in 1963. Average body weights had decreased from 1957 by 38 percent for adult females and 43 percent for adult males and were comparable to weights of reindeer in domestic herds. Lichens had been completely eliminated as a significant component of the winter diet. Sedges and grasses were expanding into sites previously occupied by lichens. In the late winter of 196364, in association with extreme snow accumulation, virtually the entire population of 6,000 reindeer died of starvation. With one known exception, all of the surviving reindeer (42 in 1966) were females. The pattern of reindeer population growth and die-off on St. Matthew Island has been observed on other island situations with introduced animals and is believed to be a product of the limited development of ecosystems and the associated deficiency of potential population-regulating factors on islands. Food supply, through its interaction with climatic factors, was the dominant population regulating mechanism for reindeer on St. Matthew Island.

St. Matthew Island, 128 square miles in area and located in the Bering Sea Wildlife Refuge in the north central Bering Sea (Fig. 1), supports a poorly developed land fauna. Native land mammals are restricted to a vole (Microtus abbreviatus) and the arctic fox ( Alopex lagopus ), although a resident population of polar bears (Thalarctos maritimus) existed there in Recent times (Elliot 1882). The reindeer on St. Matthew Island were the result of the release of 24 females and 5 males on August 20, 1944, by the U. S. Coast Guard (Klein 1959). Shortly afterwards, the Coast Guard loran station on the island was abandoned and the island has been uninhabited since then. Specimens taken for study purposes and those shot by Coast Guard personnel as a recreational pursuit have been the only harvest from the herd. With the exception of 10 in 1966, these were all taken during 1957-63 and totaled 105 animals. This paper reports on the population dynamics and range interrelationships of this island reindeer herd from the time of introduction through its rapid increase and crash die-off until July, 1966.

Read the full Article

 Easter’s End

by Jared Diamond

In just a few centuries, the people of Easter Island wiped out their forest, drove their plants and animals to extinction, and saw their complex society spiral into chaos and cannibalism. Are we about to follow their lead?

Among the most riveting mysteries of human history are those posed by vanished civilizations. Everyone who has seen the abandoned buildings of the Khmer, the Maya, or the Anasazi is immediately moved to ask the same question: Why did the societies that erected those structures disappear?

Their vanishing touches us as the disappearance of other animals, even the dinosaurs, never can. No matter how exotic those lost civilizations seem, their framers were humans like us. Who is to say we won´t succumb to the same fate? Perhaps someday New York´s skyscrapers will stand derelict and overgrown with vegetation, like the temples at Angkor Wat and Tikal.

Among all such vanished civilizations, that of the former Polynesian society on Easter Island remains unsurpassed in mystery and isolation. The mystery stems especially from the island´s gigantic stone statues and its impoverished landscape, but it is enhanced by our associations with the specific people involved: Polynesians represent for us the ultimate in exotic romance, the background for many a child´s, and an adult´s, vision of paradise. My own interest in Easter was kindled over 30 years ago when I read Thor Heyerdahl´s fabulous accounts of his Kon-Tiki voyage.

But my interest has been revived recently by a much more exciting account, one not of heroic voyages but of painstaking research and analysis. My friend David Steadman, a paleontologist, has been working with a number of other researchers who are carrying out the first systematic excavations on Easter intended to identify the animals and plants that once lived there. Their work is contributing to a new interpretation of the island´s history that makes it a tale not only of wonder but of warning as well.

Read the full article

Yesterday’s article suggests that September 11 marked the official start of  World War III. This article is frightening, but when examined closely appears to be both factual and thoughtfully written. I have begun a search for more information on this premise. Today, I am posting my findings as links at NewsSynearth.